đź©ş Powell prescribes pain

Tuesday, August 30, 2022 by Robinhood Snacks |
Tie-tening monetary policy (Tom Williams/Getty Images)

Tie-tening monetary policy (Tom Williams/Getty Images)

Tie-tening monetary policy (Tom Williams/Getty Images)

Tie-tening monetary policy (Tom Williams/Getty Images)

Yesterday’s Market Moves
Dow Jones
32,099 (-0.57%)
S&P 500
4,031 (-0.67%)
Nasdaq
12,018 (-1.02%)
Bitcoin
$20,218 (+3.31%)

Hey Snackers,

Lose yourself… in the metaverse? This year’s VMAs included a Best Metaverse Performance category for the first time, featuring Snoop Dogg and Eminem performing as Bored Ape avatars.

Stocks ticked down yesterday, extending Friday’s Powell-driven drop. The 2-year Treasury yield surged to its highest level since 2007.

Pow

Powell’s prognosis… The #flationary fight ain’t over. On Friday, Fed chair Jerome Powell said he plans to keep hiking interest rates until inflation’s under control — which could take a while. The news disappointed some investors, who hoped rates had peaked after inflation cooled last month. Powell acknowledged “pain” ahead. Markets responded accordingly:

  • Stocks slipped in the US, Europe, and Asia yesterday after plunging last week. Gold also fell, and bitcoin dipped below $20K to its lowest level since mid-July.
  • Tech tumbled, notably Apple and Nvidia. Higher rates curb spending and lower companies’ future earnings.
  • Currency climbed: The USD hit a 20-year high yesterday after investors ditched other currencies and investments for the relatively stable dollar.

Bitter pill… Powell’s ready to make sacrifices. His statement disappointed investors but was no surprise. For months JPow’s said he’ll keep fighting inflation till it sinks to near the Fed’s target of 2% — even if it means some economic pain. Last Friday he doubled down. Now he expects:

  • Single whammy: “Softening of labor market conditions” (translation: job losses).
  • Double whammy: “Sustained below-trend growth” (read: a small recession).
THE TAKEAWAY

No pain, no gain… Powell’s prescription may hurt now, but a temporary slowdown is better for markets and consumers than spiraling inflation. The medicine appears to be helping Americans already: real disposable income rose in July after falling for months. But painful side effects include slumping stocks and increasing layoffs. Despite that, jobs have (so far) been resilient. August hiring data comes out Friday.

Souper

Smart soup... Panera’s serving up broccoli-cheddar bread bowls with a side of AI. Yesterday two Panera locations in upstate New York started testing an artificial-intelligence bot called "Tori," which takes drive-thru orders and interacts with customers.

  • The voice-order tech is from OpenCity, a startup last valued at $27M. Panera is assessing Tori's accuracy and ability to cut wait times.
  • If customers dig Tori, Panera could expand it to more restaurants. FYI: nearly half of its 2K locations have drive-thru lanes.
  • Tori makes moves: OpenCity said Tori’s being used in more than two dozen restaurants, including a Popeyes in Louisiana.

From Tori to taco elevators... Fast-foodies have invested heavily in drive-thru tech since the pandemic. While lockdowns are over, takeaway sales have stayed elevated: prepandemic, less than 70% of fast-food sales came from drive-thrus. Now it’s more than 90%.

  • Need for speed: Taco Bell opened a table-free restaurant last month with taco-delivering "vertical lifts." Chipotle’s adding more digital-order Chipotlanes, and McD's is working with IBM to automate drive-thrus.
  • Need for peeps: Food service and hospitality companies led July job gains as they scrambled to hire, but were still 1.2M positions short of prepandemic headcount.
THE TAKEAWAY

Labor pains lead to robo gains... North American companies bought a record # of robots in the first half of this year to keep operations afloat. With nearly two roles open for every unemployed worker, total US labor costs surged a record 5% last quarter. While Panera locations aren't factories, it's hoping that robo drive-thrus will ease the labor crunch. If it’s successful, others could follow.

What else we’re Snackin’

  • Plant: Honda and LG are teaming up to build a $4.4B EV-battery plant. The location hasn’t been announced, but states including Georgia have been luring EV makers like Rivian and Hyundai with tax incentives.
  • Patent: Moderna sued Pfizer and BioNTech, alleging they copied mRNA patents that made their Covid vaccines possible. Moderna’s seeking damages to protect its profit-puppy vax patents.
  • Count: NASA postponed the test launch of its historic Artemis lunar mission yesterday after some #TechnicalDifficulties. Boeing, the project’s largest contractor, is hoping to restore its Apollo-era rep.
  • Groanth: Chinese tech titans like Alibaba and Xpeng suffered their slowest quarterly growth ever after China’s Covid crackdowns. Gaming giant Tencent posted its first sales decline on record.
  • ACK: Shares of DWAC, the SPAC trying to take former President Trump’s media company public, fell yesterday as shareholders considered delaying the merger amid Trump’s criminal-investigation drama.

Snack Fact of the Day

It costs the US Treasury 7.5 cents to print $1

Tuesday

  • Earnings expected from Baidu, CrowdStrike, HP, Chewy, Best Buy, and ChargePoint

Authors of this Snacks own: bitcoin and shares of Apple, Nvidia, and Moderna

ID: 2401973